RODERICK and Kathleen McKay’s successful Supreme Court bid to increase the compensation payment for the mandatory acquisition of their Ravenswood farm by Main Roads and the WA Planning Commission has clarified how landholdings should be valued in these often contentious and highly publicised cases.
The WA Planning Commission undertakes compulsory acquisition for a wide variety of public works, including major transport routes such as the recently completed Perth-to-Bunbury highway and the Perth-to-Mandurah railway.
In many cases, land for these major projects is reserved in the WA Planning Commission’s region schemes and adjacent land is ‘sterilised’ from future development with a rural zoning; but this doesn’t necessarily mean the valuation for that land should be based on this zoning, as was demonstrated in the McKays’ battle over the compensation payment for their Ravenswood farm.
Earlier this month, the Supreme Court found the McKays’ property, which was forcibly acquired in July 2006 to make way for the Perth-to-Bunbury highway, was undervalued by about $4 million.
The basis of this finding was the valuation of the land, which Main Roads and the WAPC claimed should have been based on a rural zoning with urban potential in the medium or long term.
The McKays were initially offered $9.6 million for their land, which they turned down, arguing it was worth far more.
The McKays’ legal team argued the land could be worth as much as $70 million if it had been valued on the basis of its highest and best use, including its potential to support a commercial development such as a regional shopping centre.
Justice Beech found that, were it not for the proposed public works – the Perth-to-Bunbury highway: “The urban potential of the land was reasonable, with a high degree of uncertainty and valued on that basis I find that the value of the land was $14.025 million.”
He also found there was “significant developer interest in en globo land in Murray and Mandurah including in the general vicinity of Ravenswood.”
What has caught the attention of property specialists was Justice Beech’s rejection of the assertion by Main Roads and the WA Planning Commission that the land would have been zoned rural if not for the highway works, with urban potential, giving it a value of between $6 million and $7 million.
This suggests that, in the process of evaluating land, government authorities need to retrace the history of the land and its zoning potential before a reservation was placed over it.
Industry analysts claim the Supreme Court finding could have ramifications for the way land valuations in the process of compulsory acquisitions are calculated in the future.
Main Roads and the WA Planning Commission would not comment on the case or whether it was likely to affect land valuation for compulsory acquisitions in the future.
The Urban Development Institute of Australia said it needed more time to analyse the judgement before drawing any conclusions.
However, it’s understood the finding could force future valuations for compulsory acquisition to be based on what the land would otherwise be rezoned if it hadn’t been blighted by reservation for public works.
This would include land bought with reservations already covering it and could be significant for a number of private and corporate landowners in Western Australia, whose holdings include land reserved for a range of infrastructure projects.
The McKays’ solicitor, Cornerstone Legal’s James Graham, said Justice Beech’s finding was recognition of a legal principal that has been there for some time.
“That is, you have to look at what the land would otherwise have been zoned if it hadn’t been for the public works,” Mr Graham said.